In the second of a series examining California's "green revolution", the BBC News website's Sam Wilson reports from San Jose on how the state is at the forefront of innovation in clean technology.

The most striking thing about the Miasole solar cell production plant in San Jose is how much of it is empty.

David Pearce says flexibility is a key asset of his solar cells

Probably less than a fifth of the huge production floor is occupied by machines.

But if Miasole's plan comes together, within a couple of years it will house a production line turning out vast rolls of photovoltaic cells, that some believe could help put solar power on a par with coal, gas or oil.

His company is just one of dozens in California at the cutting edge of innovation in renewable fuels.

For despite America's "addiction to oil", as President George W Bush put it, and reluctance to take on global warming at a federal level, the country is pushing the boundaries in the search for climate change solutions.

California is where this frontier spirit is freest.

Search for breakthroughs

The state has a long record of taking action on the environment. Tough energy efficiency rules have meant consumption per capita remaining flat in California for 30 years, while it has risen by 50% elsewhere in the US.

The state also has a record of technological advancement, not least in the computing and information technology fields.

Both elements are being combined in the search for "clean tech" breakthroughs, and another California speciality, venture capitalism, is now pouring in hundreds of millions of dollars for good measure.

USING IRON TO ABSORB CO2

Iron dust is poured into the sea to supplement the levels reaching oceans on winds from arid areas.

The boom is funding various clean energy projects, from developing hydrogen fuel cells to turning algae into fuel and creating synthetic fuels through biological engineering.

And the search for solutions to the climate crisis does not just involve energy.

California firm Planktos is investigating a controversial technique to scatter iron dust over the ocean, in order to stimulate the growth of plankton, which absorbs carbon dioxide - one of the main greenhouse gases.

If the idea has as much potential as Planktos boss Russ George believes, it could go a significant way towards reversing global warming all on its own.

In doing so, it could earn the firm millions through the carbon market, by selling credits to firms emitting greenhouse gases.

Many environmentalists remain wary of the Planktos plan.

And while the promise of technological advances is "vitally important" in trying to beat climate change, a Greenpeace spokesman said, people and governments should take tough action now rather than pin their hopes on far-off solutions.

But Mr George says his type of project is exactly what was envisaged by those who drew up the Kyoto treaty.

"That was designed from the beginning to create an economic incentive to invent our way out of this problem," he says.

"We are one of those companies taking that incentive and trying to deliver a technology that we can earn money from, that will solve the problem."

Capital flow

Indeed it is the clean tech sector's soaring share prices, and the possibility of big returns, that is fuelling the investment boom.

The clean tech sector is "exploding, especially in the US", says Torsten Merkel, European director of Cleantech Group, which advises investors.

CLEAN TECH BOOM

$523m invested in California clean tech in 2005

Clean tech sector ranked fifth for N American venture capital

Worldwide clean tech market estimated to reach $167bn by 2015

Between 20,000 and 83,000 jobs could be created in California by 2020

Years of past energy regulation may have saved California $56bn

Source: The Climate Group

California attracted $307m of venture capital in the first quarter of 2007, compared with $172m in the whole of Europe, he says.

"Very clearly, California is leading. It is attracting most investment and most innovation is happening there."

Many credit California's politicians for providing the stimulus.

"I think it's fair to say the [solar] industry would not exist in a meaningful way, were it not for subsidies," says Miasole CEO David Pearce.

California is putting $3bn into a 10-year programme to put solar panels on a million roofs, while the federal government chips in 30% of the installation costs.

The state has mandated that 20% of its electricity must come from renewable sources by 2010.

It has also written big cuts in greenhouse gases into law, and is laying the foundations for a carbon market that would reward firms for cutting emissions.

It means companies that find new ways to beat global warming are going to be very popular.

Solar future?

No wonder Miasole's thin-film solar technology is attracting so much interest, and money ($35m from venture capitalists in one funding round last October).

Rather than using conventional crystalline silicon - which has risen in price due to a shortage - Miasole uses an alloy of four metals: copper, indium, gallium and selenium (or Cigs).

Miasole has plenty of room for growth

"It's a challenging material to work with - that's one of the reasons it's been such a struggle to get Cigs into high volume," says Mr Pearce.

Various firms are trying different techniques, but Mr Pearce believes Miasole's "sputtering" method - spraying the alloy onto a flexible steel foil - is the breakthrough that will open up thin-film solar to mass production.

The advantage Cigs has over other thin-film techniques is that it is more efficient in converting the Sun's energy into electricity, says Mr Pearce.

It beats conventional rigid, heavy solar panels because it is so flexible it can be integrated into roofing felt and distributed in rolls, like carpet.

Mr Pearce believes that thin-film technology will compete on price with silicon as soon as 2010.

More dramatically, solar power will grow from less than 0.01% of global electrical generation today, to 10% or even 20% at some time in the future, he says.

And while production may turn out to be cheaper in countries like China, and the markets for solar power are currently bigger in Germany and Japan, it is its talent for innovation that will put the US in pole position to benefit.

"I believe it will happen, and California and Silicon Valley will lead that charge."